NatWest, Lloyds Banking Group, Barclays and HSBC have begun live pilots of commercial variable recurring payments (VRPs), extending a payment rail that has so far been confined to utility bills and automated savings transfers into everyday retail subscriptions and merchant checkouts. Running through August and September 2026, the trials follow a multilateral agreement brokered by the Joint Regulatory Oversight Committee (JROC) earlier this year and are now supervised by the Financial Conduct Authority as its oversight of Pay.UK widens. According to banks and fintechs involved, the pilots are the clearest sign yet that open banking payments are moving from a niche account-to-account tool into a genuine Direct Debit alternative.
VRPs already process a meaningful slice of UK payments volume. Under the Competition and Markets Authority's original 2022 order, the nine largest current account providers were required to support "sweeping" VRPs, which let customers automatically move money into savings accounts or pay down credit balances without re-authorising each transfer. Pay.UK data cited by the FCA in July put monthly sweeping volumes at roughly 2.6 million transactions, a figure that has grown steadily but remained well short of Direct Debit's estimated 4.5 billion annual payments. But commercial VRPs go further, opening the same mechanism to retailers, subscription services and other merchants rather than restricting it to banks moving customers' own money between their own accounts.
How commercial VRPs differ from Direct Debit
Unlike a Direct Debit mandate, which is set up once on paper or online and can take days to cancel, a VRP consent is granted inside the customer's banking app and can be revoked with a single tap, taking effect immediately rather than at the next billing cycle. Payments move via Faster Payments rails, arriving in a merchant's account within seconds rather than the three-to-five working days typical of a Direct Debit collection. During the pilot phase, JROC's interim scheme rules cap the fee a bank can charge a merchant per commercial VRP transaction at 3p, a level regulators expect to revisit once volumes justify a permanent pricing model.
Early commercial VRP merchants span gym operators, price-comparison intermediaries and a handful of charities collecting recurring donations — a list Pay.UK describes as still expanding weekly as more banks complete technical onboarding. Meanwhile, several building societies, including Nationwide, have said they expect to join the scheme once the FCA publishes finalised conduct rules, expected before the end of 2026. Not every bank is moving at the same pace: Santander UK has confirmed it will wait for the full regulatory rulebook rather than operate under interim terms, a stance that puts it at odds with the four largest current account providers already live.
Funding dispute delayed the wider rollout
The commercial VRP scheme was originally expected to launch in 2024, but talks stalled for more than a year over who should bear the cost of running the shared infrastructure — banks providing the payment rail, or the merchants and price comparison platforms benefiting from lower failure rates. According to the FCA, that dispute features prominently in its account of why oversight of the scheme shifted away from the Payment Systems Regulator ahead of its wind-down. Pay.UK's board is expected to publish a full-year adoption report in early 2027, once the pilot merchants have completed at least two full billing cycles under the new rules.